425 P.3d 297
Kan.2018Background
- In 1986 Kevin Trear bought land from Susan Chamberlain; the contract gave Trear a "first right of refusal" to adjoining property "at a price and upon terms mutually agreed upon by the parties," and stated the right would "lapse" if the parties could not agree.
- After Chamberlain's husband died, in 2013 she offered Trear the entire adjoining 73-acre tract for $289,000 (offer to expire in eight days); Trear did not respond.
- Chamberlain later listed the 73 acres with a broker, then about a year later sold 64 of the 73 acres (excluding the house) to her daughter and another buyer for $91,124.
- Trear sued seeking equitable relief, including specific performance to purchase the 64 acres at the later sale price, alleging breach of the first-right provision and breach of the implied covenant of good faith and fair dealing.
- The district court granted summary judgment for defendants (holding the clause violated the rule against perpetuities); the Court of Appeals reversed on that ground and held Trear should have been offered the same third-party terms; the Kansas Supreme Court granted review on the contractual compliance issue.
- The Supreme Court held Chamberlain satisfied the contract by offering Trear the first opportunity to negotiate and that Trear’s failure to respond allowed the contractual right to lapse; remanded to determine the unresolved good-faith/fair-dealing claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Chamberlain’s 2013 offer discharged the first right of refusal so Trear could not enforce purchase of later-sold 64 acres | Trear: a right of first refusal gives holder option-equivalent rights when seller forms intent to sell; he should have been able to buy on the later sale terms | Chamberlain: the contract grants Trear the first right to negotiate with her; she offered him that chance and, because they did not agree, the right lapsed per contract terms | Held: The contract gave Trear a first opportunity to negotiate; Chamberlain fulfilled that obligation and, absent further facts, the right lapsed when the parties did not mutually agree |
| Whether the contract required Chamberlain to offer Trear the same price/terms she later accepted from third parties | Trear: vendor cannot evade preemptive right by selling differently; he was entitled to the same terms as third-party sale | Chamberlain: contract contains no third-party-price language; parties bargained for mutual agreement between them, not matching a third‑party deal | Held: Court rejects implying a third-party matching requirement; contract language controls and contains no such term |
| Whether the panel/district courts erred by importing standard right-of-refusal assumptions into this specific contract | Trear: reliance on general right-of-refusal doctrine supports his claim | Chamberlain: the contract’s explicit process supersedes any ordinary-label implications | Held: Lower courts erroneously imported unstated terms; the Court enforces the contract as written |
| Whether unresolved good-faith/fair-dealing issues preclude final judgment for defendants on remand | Trear: the price discrepancy suggests lack of good faith that may void the lapse | Chamberlain: Trear’s failure to respond/engage shows lack of reciprocal good faith | Held: Remand required—the implied covenant claim raises factual issues unsuited to resolution here on the present record |
Key Cases Cited
- Armstrong v. Bromley Quarry & Asphalt, Inc., 305 Kan. 16 (Kan. 2016) (summary judgment standard)
- Waste Connections of Kansas, Inc. v. Ritchie Corp., 296 Kan. 943 (Kan. 2013) (describing nature of right of first refusal and implied covenant)
- Anderson v. Armour & Co., 205 Kan. 801 (Kan. 1970) (vendor may not circumvent preemptive right by altering tract sold)
- Miller v. Alexander, 13 Kan. App. 2d 543 (Kan. Ct. App. 1989) (right-holder’s option-equivalent when seller forms intent to sell)
- Atkins v. Webcon, 308 Kan. 92 (Kan. 2018) (affirming outcome for different reasoning)